COVID-19: Guidance to States on Implementing the 6.2% Increase to Medicaid FMAP; Minor Modification Made under the CARES Act

By: | March 30, 2020

The Centers for Medicare & Medicaid Services (CMS) recently released set of FAQs designed to give state Medicaid programs implementation guidance on the 6.2 percent increase in the Federal Medical Assistance Percentage (FMAP) for each state and territory, which was made possible under Section 6008 of the Families First Coronavirus Response Act (FFCRA). Our WHG summary of the bill is available here.

This guidance was issued prior to the passage of the third COVID-19 legislative package on Friday, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Please note the bold/italic text below for a slight change that was implemented under that bill.

The guidance confirms that all state Medicaid agencies (including DC and territories) may be eligible for the increased FMAP – as long as they adhere to certain stipulations under the FFCRA – retroactively to January 1, 2020 and through the end of the quarter in which the public health emergency for COVID-19 ends (by the determination of the HHS Secretary). Additionally, the document addresses the following:

Allowable Expenditures – First, the guidance clarifies that the temporary 6.2 percent increase in FMAP applies only to medical assistance expenditures for which federal matching is paid ordinarily at the state-specific FMAP rate and not for those regularly paid at a differing or enhanced FMAP rates (EFMAP) (e.g. administrative expenses, family planning services, expansion state adult group FMAP, home health services, etc.). This can include expenditures for services provided under a Section 1115 waiver program. For information pertaining specifically to the impact of EFMAP rates for the Children’s Health Insurance Program (CHIP) and individuals eligible on the basis of breast or cervical cancer, see FAQ question #A4.

Regarding the timing of qualified expenditures, CMS clarifies that expenditures are considered to be incurred based on when the state makes a payment to a provider, not based on the date of service. In other words, the quarter in which the State makes a payment is the quarter in which the expenditure will be considered to be incurred, and the FMAP applicable to that quarter is the appropriate FMAP for that claim.

Conditions under which states can claim the funds – Pursuant to the FFCRA and effective as of March 18, the guidance dictates that in order to qualify for the temporary FMAP increase, states must meet the following requirements through the end of the month when the public health emergency ends:

    • Coverage of COVID-19 Services – States must cover, without impositions of any cost sharing, testing, services and treatments— including vaccines, specialized equipment, and therapies—related to COVID-19 (see FAQs #B4 and #B5).
    • Continuous Coverage – States must not terminate individuals from Medicaid if such individuals were enrolled in the program as of the date of the beginning of the emergency period, or becomes enrolled during the emergency period, unless the individual voluntarily terminates eligibility or is no longer a resident of the state (i.e. the continuous coverage requirement – see FAQs #B6 through #B13). This includes the expectation that states should make a good faith effort to identify and reinstate individuals whose coverage was terminated on or after March 18, 2020 and should suspend any terminations already scheduled to occur during the emergency period. Note that the continuous coverage provision does not apply to those enrolled in CHIP.
    • Maintenance of Effort – States must maintain eligibility standards, methodologies, or procedures that are no more restrictive than what the state had in place as of January 1, 2020 (i.e. the maintenance of effort requirement – see FAQ #B2 for more information).
    • Freeze of Premium Rates – Pursuant to the FFCRA, the CMS guidance indicates that states must not charge premiums that exceed those that were in place as of January 1, 2020. However, after the release of this guidance document, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the third legislative package signed into law on March 27) amended this section of the FFCRA to ensure that a state would not be ineligible for the increased FMAP on the basis that it imposes a premium, so long as such premium was in effect by the date of enactment of the FFCRA (March 18). We have not yet seen updated guidance from CMS.

Flow of Federal Funds and State Reporting – As outlined in the guidance, CMS acted to make the enhanced funding available to states almost immediately. For the period beginning January 1, 2020 through March 31, 2020, states received the funds in their Payment Management System (PMS) on Wednesday, March 25. These funds can only be applied to qualified expenditures made during that period, and not to expenditures it has not yet occurred, or those that happened prior to January 1. The agency indicates that additional funds for the April 1 through June 30 period will be delivered “as close to April 1 as possible.”

See FAQ #C3 for a discussion of how CMS calculates the increased matching awards based on budget estimates certified on state Form CMS-37 in the Medicaid and Children’s Health Insurance Program Budget and Expenditure System (MBES/CBES), As with all Medicaid grant award funding, CMS notes that these funds will be reconciled against claimed and allowable expenditures when states file their quarterly CMS-64 expenditure reports. The agency further notes that it is currently working to modify the Form CMS-64 and Form CMS-37 in the MBES/CBES system to accommodate these changes and ease reporting of budget estimates and expenditures eligible for the increase FMAP. CMS will issue further guidance and offer training to states “as soon as possible.” FAQs #C1 through #C11 address additional reporting considerations.

Attestation and Compliance – Finally, in FAQs #D1-#D4, CMS addresses certain requirements related to state attestation and compliance, including with requirements that states must not require political subdivisions of the state to pay a greater portion of the non-federal share of expenditures.

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Taylor Cowey

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